S.Amdt. 2150

SA 2150. Mr. CORNYN submitted an amendment intended to be proposed by
him to the bill S. 4638, to authorize appropriations for fiscal year
2025 for military activities of the Department of Defense, for military
construction, and for defense activities of the Department of Energy,
to prescribe military personnel strengths for such fiscal year, and for
other purposes; which was ordered to lie on the table; as follows:

At the appropriate place in title VI, insert the following:

SEC. 6__. PILOT PROGRAMS TO ASSESS FEASIBILITY OF BUDGET-
NEUTRALITY FOR DEFENSE COMMISSARY SYSTEM WITH
IMPROVED SERVICE.

(a) Findings.--Congress makes the following findings:
(1) The commissary benefit is no longer meeting its
original intent in serving families of members of the Armed
Forces stationed in austere locations. With commercial
grocery stores now located outside every military
installation in the continental United States and potentially
able to operate commissaries on those installations
efficiently without an annual subsidy, providing subsidies
for the operation of commissaries may no longer be necessary.
(2) Congress is aware that to keep costs low for commissary
customers amid declining year-to-year sales, the Federal
Government subsidizes commissaries with taxpayer funds. In
2023, the Defense Commissary Agency received $1,400,000,000
in appropriations, and the President's fiscal year 2025
budget request increases that to $1,570,200,000, despite the
funding level constraints imposed by the Fiscal
Responsibility Act of 2023 (Public Law 118-5; 137 Stat. 10).
(3) Additionally, supply chain challenges, minimal market
share, and availability of better alternatives near most
commissary locations are limiting selections, increasing
costs, and decreasing patronage at commissaries. Members of
the Armed Forces and their families should have affordable
access to American-style goods while they are stationed in
foreign and remote areas, but reports indicate the shelves
are bare in places like Camp Humphreys, South Korea, and
costs are higher than they would be for commercial grocery
stores. Unlike commercial grocery chains, the costs to supply
the Defense Commissary Agency are higher than the costs to
supply commercial grocery chains because the Defense
Commissary Agency does not have direct control over its
supply chain and commissary goods are bought through multiple
independent brokers who add their own fees to the cost of
products they sell to the commissaries, which raises the
costs of the goods. The broker markup can run as much as 30
to 40 percent more than the actual cost of an item. In
addition, since the volume of sales at commissaries is
relatively small, they do not have the buying power to bring
the volume discounts that the major supermarket chains get.
Additional broken costs are part of the supply chain
inefficiencies that make the Defense Commissary Agency
uncompetitive with civilian sector options. The purchasing
power of commercial grocers could significantly lower the
cost of goods because the leverage those grocers have to
obtain quantity discounts offered by suppliers.
(4) While the commissary benefit is designed to save
shoppers more than 25 cents on the dollar over other
retailers' prices every time they shop, a Government
Accountability Office report in June 2022 determined that the
Defense Commissary Agency used unreliable and inconsistent
methodologies to calculate the annual savings realized by
commissary shoppers, resulting in inflated savings. Other
reports indicate commissaries sales declined 26 percent from
2015 to 2020, while Nielsen Company retail data demonstrated
that private sector retail grocery sales increased 16.60
percent for 2020 alone. From 2019 to 2022, sales at many
private sector retail grocery stores were up 51 percent while
commissary sales were down 13 percent during the same period.
Finally, off-base shopping currently offers options and
conveniences not available at commissaries, such as same-day
home delivery and extended shopping hours.
(b) Pilot Programs.--
(1) In general.--The Secretary of Defense shall conduct one
or more pilot programs to evaluate the feasibility and
advisability of processes and methods for achieving budget
neutrality in the delivery of commissary and exchange
benefits and meeting other applicable benchmarks in
accordance with this subsection.
(2) Establishment of prices.--The Secretary shall require
any commissary or private sector entity participating in a
pilot program carried out under paragraph (1) to establish
appropriate prices in response to market conditions and
customer demand, provided that the level of savings required
by paragraph (4) is maintained.
(3) Establishment of benchmarks.--
(A) In general.--In carrying out pilot programs under
paragraph (1), the Secretary shall, with review by the
Government Accountability Office, the Nielsen Company, and an
independent accounting firm, establish specific, measurable
benchmarks for measuring success in the provision of high-
quality grocery goods and products, discount savings to
patrons, and high levels of customer satisfaction while
achieving budget-neutrality in the delivery of commissary and
exchange benefits.
(B) Use of ups codes.--In establishing the benchmarks
required by subparagraph (A), the Secretary shall ensure that
the market basket of goods use for purposes of the benchmarks
consists of goods with Universal Product Codes so that
identical goods sold by various different retailers can be
identified and tracked.

[[Page S4397]]

(C) Audits.--The baseline of savings for purposes of the
benchmarks required by subparagraph (A) shall be audited by
the Government Accountability Office, the Nielsen Company,
and an independent accounting firm.
(4) Required savings to patrons.--
(A) In general.--The Secretary shall ensure that the level
of savings for commissary patrons under any pilot program
carried out under paragraph (1) is not less than the level of
savings for such patrons before the implementation of the
pilot program, as follows:
(i) Before commencing a pilot program under paragraph (1),
the Secretary shall establish a baseline of savings for
patrons at each commissary participating in the pilot program
by comparing prices charged by the commissary for a
representative market basket of goods to prices charged by
local competitors for the same market basket of goods.
(ii) After implementing a pilot program under paragraph
(1), the Secretary shall ensure that each commissary or
private sector entity participating in the pilot program--

(I) conducts market-basket price comparisons not less
frequently than once a month; and
(II) adjusts pricing as necessary to ensure that pricing
achieves savings for patrons that are reasonably consistent
with the baseline savings for the commissary established
pursuant to clause (i).

(B) Verification.--The Secretary shall arrange to have the
baseline of savings established under clause (i) of
subparagraph (A) and the price comparisons and adjustments
required by clause (ii) of that subparagraph validated by the
Government Accountability Office, the Nielsen Company, and an
independent accounting firm.
(5) Waiver of certain requirements.--In carrying out a
pilot program under paragraph (1), the Secretary may waive
any requirement of chapter 147 of title 10, United States
Code, that the Secretary determines necessary.
(6) Duration of authority.--
(A) In general.--Except as provided by subparagraph (B),
the authority of the Secretary to carry out a pilot program
under paragraph (1) shall expire on the date that is five
years after the date of the enactment of this Act.
(B) Extension.--If a pilot program carried out under
paragraph (1) achieves budget-neutrality in the delivery of
commissary and exchange benefits and meets other applicable
benchmarks, as measured using the benchmarks required by
paragraph (3), the Secretary may continue the pilot program
for an additional period of not more than 10 years after the
date described in subparagraph (A).
(7) Reports required.--
(A) Initial reports.--Not later than 30 days before
commencing a pilot program under paragraph (1), the Secretary
shall submit to the Committees on Armed Services of the
Senate and the House of Representatives a report on the pilot
program that includes the following:
(i) A description of the pilot program.
(ii) The provisions, if any, of chapter 147 of title 10,
United States Code, that will be waived to carry out the
pilot program.
(B) Final reports.--Not later than 90 days after the date
of the completion of any pilot program carried out under
paragraph (1) or the date of the commencement of an extension
of a pilot program under paragraph (6)(B), the Secretary
shall submit to the Committees on Armed Services of the
Senate and the House of Representatives a report on the pilot
program that includes the following:
(i) A description and assessment of the pilot program.
(ii) Such recommendations for administrative or legislative
action as the Secretary considers appropriate in light of the
pilot program.
______